OUR 115MW renewable energy project fees 'prohibitive' - JSEA

The 115 megawatts of renewable energy projects on offer to investors will receive lots of interest but few bids, based on the mediocre returns and high costs associated with bidding, Roger Chang, president of the Jamaica Solar Energy Association (JSEA), said last Friday.

Investors had up until Friday to indicate their intention to submit a proposal. Then they must submit the proposals by April 2013.

There has been "interest - yes; real bids - no," said Chang via email. "Many investors have pulled out because of the terms."

Neither Chang nor the JSEA applied, based on what he indicated was the prohibitive fees.

"The upfront proposal costs are too high - estimates range from just under US$1 million to as high as US$2 million," he stated.

The Office of Utilities Regulation will offer investors a maximum tariff range of US$0.11 to US$0.26 per kilowatt-hour (kWh) for various renewable projects up for bidding.

These include bagasse at 15.16 US cents, hydro at 11.13 US cents, waste to energy at 14.88 US cents, wind at 13.36 US cents, and solar at 26.73 US cents. Consumers pay about US$0.40 per KWh for electricity from power provider Jamaica Public Service Company (JPS).

Not good enough

"It isn't a bad price, but not good enough to really push renewable energy, especially for photovoltaic technology and Jamaica's infant renewable industry. Many aspects of this industry have never done renewable investments of this scale from financing (no local bank has this experience), land acquisition, permitting," he said.

OUR was expected to announce the interest in the 115MW project on Monday.

The Jamaican Government has set a target of achieving 20 per cent for renewables in the energy mix by 2030.

Chang said there were indirect and intangible costs associated with developing renewables, which requires a "high" tariff rate initially to "push start" the industry.

"Once the ball is rolling, the renewable energy [market] will drive down the price," he said.

JPS, whose monopoly on power distribution is now being tested in the courts, accounts for 68 per cent or 634MW of the total generating capacity on the national grid, according to the OUR in its renewable request document on its website. The remaining 32 per cent of capacity on the national grid is provided by three main independent power producers.

The Government recently cleared the way for investment by rescinding the Petroleum Corporation of Jamaica (Extension of Functions) Order, which gave the PCJ the exclusive right to develop renewable energy projects in Jamaica. The removal of exclusivity means that the renewable energy market in Jamaica is now fully liberalised, and that the OUR can now seek competitive bids for the addition of renewable energy capacity.